New York
World stocks eked out gains on Friday as investors, shrugging off bets for a more dovish tone, took comfort from a balanced message from the Federal Reserve that the inflation fight is not over, but it will proceed carefully in its next move.
In remarks delivered at the central bank conference in Jackson Hole, Wyoming, Fed Chair Jerome Powell said inflation was still too high even with recent favourable readings, and that the U.S. central bank has substantial ground to cover to regain price stability.
But at the same time, Powell noted that economic uncertainty called for agile monetary policy making, and that the Fed will proceed carefully when deciding its next policy move.
There was a little something for everybody. If you’re a bear, you heard him say we’re going to be restrictive, and we might hike rates, said David Sadkin, president at Bel Air Investment Advisors.
If you’re a bull, you heard him say, we’re making progress against inflation and we still expect there to be a lag in from the effects of monetary policy, and we could be on hold.
The remarks led U.S. stocks to gyrate between modest gains and losses before jumping higher towards the end of the session. The Dow Jones gained 0.73%, the S&P 500 rose 0.67% and the Nasdaq Composite gained 0.94%. Gains on Wall Street lifted global stocks, and the MSCI All Country stock index edged 0.12% higher.
U.S. bond investors nonetheless dialled back their bets of a rate hike in November and December following Powell’s remarks, though Treasury yields traded near break-even by late morning.
